July 29, 2010

Sample of Food Price Inflation from 1980 to 2010

Didn't milk used to cost like $1.50 a gallon or something?  Now it seems milk is $3 a gallon.  I think I remember spending 22¢ a pound on bananas and now they are like 70¢.   Have food costs really doubled in the past 10 years or so??    Am I just remembering prices wrong?   Or worse yet, I turning into an old man before my time by waxing nostalgic about how "In my day, candy bars used to cost a quarter!!".  

I decided to take a look at real data on the price of foods over the past and get the truth of the matter.

The BLS tracks the Consumer Price Index.  They have information on inflation and they track data for various individual food prices.  I picked a fairly random sample of food items meant to cover major topics:

Bread, white, pan, per lb. (453.6 gm)   
Flour, white, all purpose, per lb. (453.6 gm)   
Ground beef, 100% beef, per lb. (453.6 gm)   
Chicken breast, bone-in, per lb. (453.6 gm)   
Bananas, per lb. (453.6 gm)   
Potatoes, white, per lb. (453.6 gm)   
Coffee, 100%, ground roast, all sizes, per lb. (453.6 gm)   
Margarine, stick, per lb. (453.6 gm)

Here is a list of the foods, which year the BLS data starts at and the annual inflation from the start of the data up until 2010.  I got the BLS data for the US City Average and I'm just looking at January prices just to make the math simpler.  I'm assuming there isn't a lot of month to month volatility in prices or if there is its just due to temporary conditions like bad weather causing a drought or something.

Here's the inflation data per item:

Food Bread Flour Beef Chicken Bananas Potatoes Coffee Margarine
Start  1980 1980 1984 1980 1980 1988 1980 1984
Inflation 3.4% 3.0% 2.2% 1.9% 2.0% 3.9% 0.6% 1.7%

The foods in question have been going up at inflation rates in the 0.6% to 3.4% range.    From 1981 to 2010 food prices as a whole increased at an inflation rate of 3.0%.   The overall inflation rate (CPI) in that same time period from '81 to 2010 was 3.2%.

Looking at the a graphical chart of the actual prices we see the upward trend :

Gaps are due to data missing for certain years from the BLS information.

Most of the food prices I looked at increased in price fairly steadily at an upward gradual increase over the years.   But the price of coffee was pretty volatile with it jumping up and down by large %'s from year to year.  More often than not the prices goes up or down by more than 6%.  The price jumped drastically from 1994 to 1995.   I did a quick google search and found a reference in a book 'South America, Central America and the Caribbean 2003' that said: "In June and July 1994 coffee prices escalated sharply, following reports that as much as 50% of the 1995/96 Brazilian crop had been damaged by frosts"  There you go, a bad crop caused the price to jump.

Generally the cost of the commodity food items I looked at have had relatively mild inflation over the past 3 decades in the range of 0.6% to 3.9%.  Individual food items may go up at a rate slightly higher or lower than foods in general or CPI, but the long term inflation of foods I looked at are within 1% of the general CPI.  Keep in mind this is just a sample of 8 foods and other foods have behaved differently.

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